Solar Demand In Germany Picking Up

Germanyinstalled enough solar over the past year to warrant a 9 percent to 11percent drop in solar power pricing in 2010. An anticipated change inpolicy may create a boom for the market for the first half of nextyear, an analyst said Friday.

The country,which is expected to be the largest market in 2009, sawabout 2.34 gigawatts of new solar energy generation capacity betweenSept. 30 2008 and Sept. 30 2009 (1.47 gigawatts from January toSeptember this year). That surpassed the 1.5 gigawatts threshold beforethe new set of solar pricing, commonly referred to as feed-in tariff,could be in effect.

As a result, the pricing for rooftop systems will fall 9 percentwhile the ground-mounted systems will fall 11 percent starting in Jan.1, wrote Alexander Karnick, an equity analyst at Deutsche Bank, in aresearch note.

The boom in Germany isn’t surprising. Ever since Spain, the largestmarket in 2008, dramatically shrunk its feed-in tariff for 2009,companies and analysts have pegged Germany as the best market this year(see U.S. Solar Market: So Promising, Except for 2009).

Although the financial market crisis has made project financingdifficult to come by worldwide, one could argue that its impact is moreacute in the United States, where policies favor large-scale powerplant projects that require millions of dollars to built.

Feed-in tariff policies require utilities to buy all the availablesolar electricity for sale at government-set prices, which are muchhigher than pricing for conventional power. This kind of incentivemakes owning solar a profit-making enterprise, and attracts not justlarge power project developers but also homeowners and farmers.

A feed-in tariff policy is in place not only in Germany and Spain,but also in other European countries such as France, Italy and CzechRepublic.

The United States doesn’t have a national feed-in tariff policy, andthe vast majority of states don’t have them either. But many states dohave laws requiring utilities to buy renewable energy, and thosepolicies have prompted utilities to buy solar, wind and other renewableelectricity from independent power producers – or build their own.Those power projects tend to be large, some in hundreds of megawatts.

Germany could see a lot more installations in the current, fourthquarter, Karnick noted. That could be partly driven by talks about apossible change to the feed-in tariff some time in 2010.

A federal election last month produced a new political coalitionwith leaders that have expressed misgivings in the past about whetherthe solar industry still needs the generous feed-in tariff to prosper.

German lawmakers haven’t said what changes they are considering. But the coalition did recently issue a policy framework that indicates the cuts to the feed in tariff would not be as drastic as some had feared.

"The political leadership understands that solar has createdeconomic benefits and jobs," said Julie Blunden, vice president ofpublic policy at San Jose, Calif.-based SunPower,during an interview at Solar Power International in Anaheim thisweek. "Making abrupt changes isn’t a good way to maintain a healthymarket."

Another factor that could drive more installations in the currentquarter is weather. Germany is heading into winter, which typicallyhalts solar energy installations.

During the winter, northern Europe is dead," said Rainer Gegenwart, CEO of Germany-based Masdar PV, during Solar Power International. "Everybody wants to bid in the fourth quarter, not the first quarter."

But Karnick cautioned against setting inflated expectations for theGerman market next year, and noted that the market still has anoversupply of solar panels.

"We got the impression that expectations are inflated mainly on theback of the German market acceleration in [the second half of thisyear], while other markets are still below expectations or behindschedule (i.e. US/China, Italy, France etc.)," Karnick wrote. "Hence,we remain cautious given structural oversupply weighing on ASP/marginsand low visibility into 2010."

Other Solar

Business

Miscellaneous

ABOUT SOLARFEEDS

SolarFeeds is a daily serving of curated, categorized news for solar professionals, financiers, and enthusiasts. Each original and fully-attributed news story posted to SolarFeeds is distributed to our expansive social network including Twitter, Facebook, and Google+. If you’d like to get in touch, we would be glad to hear from you. Drop us a line from the Contact page.

Join the club

We're glad you're visiting, but did you know you can also get a daily and weekly digest email of SolarFeed's top solar news to your email inbox? Consider joining the mailing list.Email address: